Institutional Conflict of Interest and Commercialization

Joyce Brinton

Director, Office for Technology and Trademark Licensing

Harvard University

Intellectual Property Summer Conference for Senior University ExecutivesJuly 27-28, 2001University of WashingtonSeattle, Washington

Institutional Conflicts of Interest

What are they?

Why worry about them?

What can we do manage them?

A Possible Definition?

An institutional conflict of interest exists when an activity that could result in a financial benefit for the institution could, at the same time, detract from, or appear to detract from, the institution’s primary mission.

Mission(s) of the Modern Research University

Education of students Advancing knowledge through research and scholarship Preservation and dissemination of knowledge Provision of clinical care (in the case of medical

schools/centers)

Public service to the community Technology transfer Economic development Community enrichment through public educational and

cultural activities

Every university has its own unique mission mix

Multiple Missions

Lure of Corporate Research

Funding

Potential Technology Transfer Income

Potential for Institutional Conflicts of Interest

Less emphasis on teaching Restrictions on publication

Reduced quality of education Delayed/censored

publications Reduced quality of clinical

care

Perceptions

Why worry?

Loss of public trust

Increasing federal concerns

Potential legal liability

How to manage?

That’s the big question!

First, you have to recognize that there is an issue.

Do you need a policy?

Who has an Institutional Conflict of Interest Policy?

Do you have other policies that address these issues?

Harvard does not have a specific ICOI Policy

IP Policy makes clear “public good” takes precedence over

“profit” teaching and research come before

technology transfer

Working on “Partnerships” Policy

Hypothetical Situations:A way to understand Institutional Conflicts of Interest

Think about: Primacy of Academic Mission - education and

research Freedom of Inquiry Open Exchange of Ideas Educational Welfare of Students Public Trust

Hypothetical Situation 1

The university's licensee (in which the university and the inventor hold stock) is about to initiate clinical trials of a drug based on the university's technology. It is proposed that some of those trials will take place at the university's medical center - although the inventor will not be directly involved.

Will the university’s equity holdings and the prospect of royalty income if the FDA approves the drug be perceived as influencing

the IRB review process? the reliability of the results of the trials themselves?

What will be the public reaction is there is an “adverse event” in the trials and a patient dies?

Hypothetical Situation 2

The university has licensed Professor X’s technology to a start-up company in which she is a founder and in which the university has received stock. Professor X encourages her students to work on projects that will, if successful, enhance the company’s ability to commercialize Professor X’s technology and thus the success of the company.

Is the university’s ability to judge whether these projects are in the best interest of the student compromised because it stands to gain financially if the projects are successful?

Hypothetical Situation 3

The university has licensed Professor A’s technology to a start up and has received stock as part of the license compensation. The company has licensed some competing technology from another university and is not currently developing Professor A’s technology. The company says it will do so in the future if the competing technology shows no advantages.

If the university does not terminate its license for default (a failure to meet development

milestones), will that decision be seen as being the result of a desire protect the value of the university’s stock?

Will that view persist if there are no other viable licensees for the technology?

Hypothetical Situation 4

A Fortune 500 company offers the university a very large research grant to support research in the information technology field as well as funds to renovate laboratories in the computer sciences department and to endow a computer science professorship. The company is not particularly interested in patent protection, but wants inventions and computer software to be kept as trade secrets for several years – so it can further develop them in-house and thus obtain a jump on the competition.

Would such an arrangement be contrary to the university’s mission to disseminate knowledge?

Would it undermine the educational experience of students within the department?

Hypothetical Situation 5

The university is offered $20 million by a large pharmaceutical company in exchange for granting the company a first option to license (on an exclusive basis) any pharmaceutical invention arising from several laboratories over the next five years. The university would not be permitted to enter into sponsored research agreements with other companies that would grant those companies rights to inventions from these laboratories unless the large pharmaceutical company gave its permission.

Would such an arrangement undermine the university’s research mission?

Would such an arrangement be acceptable to the NIH?

Hypothetical Situation 6

Assistant Professor X and his laboratory have made many inventions over the years and several of them generate considerable income for the university. Professor X is being considered for tenure.

Will the university be influenced in its decision by the fact that Professor X is likely to make more income-producing inventions in the future?

Hypothetical Situation 7

Several companies are seeking exclusive licenses to an invention. One of the companies is a large donor to the university and/or its president serves on the university’s board of trustees and/or the university has invested heavily on the company’s stock.

If the university selects that company, will the decision be perceived as having been

influenced by this relationship?

Hypothetical Situation 8

Professor A is working with a venture capitalist to set up a company that will license his invention from the university, with partial payment being made in stock. The company also wants to license Professor B’s invention but Professor B is concerned that a start-up will not be able to develop his technology as well as an established company. The venture capitalist is one with whom the university has worked well on a number of other start-ups and is a large donor to the university.

If the university decides to license Professor B’s technology to the company, will the decision be perceived as driven by the university’s desire to enhance the value of its stock and/or its desire to please a large donor?

Hypothetical Situations: Common Themes

University has a financial interest:

Stock in a company Prospect of royalties Significant research support from a company

Having a financial interest in a company

Just because there is a conflict of interest

There is a conflict of interest

The proposed action/activity is unethical or inappropriate

But careful consideration is needed

Understand that “apparent conflict” can damage

Identify types of institutional conflicts of interest – real and apparent

those that should be prohibited

those that can be managed

Realize that all institutional conflicts cannot be eliminated

Establish review mechanisms

Develop management strategies

Educate decision makers

Don’t get carried away

Summary

Some Final Thoughts

Technology transfer and economic development activities can create the perception that they conflict with the university’s education, research, and knowledge dissemination missions. Without care, these activities could, in fact, damage the university’s ability to carry out its teaching, research, and knowledge dissemination missions.

Some Final Thoughts (cont’d)

Technology transfer and economic development pose their own internal conflicts – to what extent does the potential for income generation for the university influence the institution’s decisions regarding the best way for a technology to be developed and brought to market and whether the formation of a start-up company is in the best interests of the technology and the public.